1. Hauptpressekonferenz EXPO REAL The Townsend Group Kevin Lynch Principal and Co-Founder The Townsend Group October 6, 2008

2. The Townsend Group Key Observations on Current Global Real Estate Investment Market ■The Markets are in disarray and no one knows where or when the bottom will hit —Transaction volumes (sales) are down 70% globally from 2007 levels —Credit Markets are locked up ■The next 12 months may be very PAINFUL —A reversion to the mean return of 9% for real estate could affect pricing DOWNWARDS of an additional 20-30% —Borrowers will struggle to refinance debt maturing over the next several years. Those with High Gearing (75-90%) may already be underwater —There is virtually no market or property type that hasn’t been affected 1

3. The Townsend Group Where did all the Money Go? ■Institutional investors are grappling with the Denominator effect —Those who have dedicated allocations to real estate of 10-15% have seen the erosion of there plan assets due to the horrendous global equity and fixed income markets —What was once a 10% allocation has now become more like 15% creating an overweighting to the asset class  Core real estate re-pricing risk has sidelined capital earmarked for these types of properties —Investors have INCREASED allocation to real estate due to the low to-negative correlations with other asset classes and low volatility —With current returns on purchasing distressed debt greater than expected near term returns on equity more capital is being committed to structured finance vehicles 2

4. The Townsend Group “The Largest Financial Shock since the Great Depression” (IMF 4/08) ■Triggered initially by the US sub-prime residential market ■Loss of confidence in the asset backed securities market ■Collapse in debt issuance, IPO’s and M&A activity ■Unprecedented liquidity problems in the inter-bank markets ■The failure of a large UK mortgage lender (Northern Rock), Lehman Bankruptcy, Bear Sterns, AIG, Merrill Lynch and Wachovia rescues ■US $800 billion bailout 3

5. The Townsend Group The Crystal Ball of Challenges and Opportunities ■Credit conditions will remain tight for the foreseeable future —This will provide opportunities for those investors with capital to initiate new loans at reduced LTV’s or allow them to acquire maturing or distressed debt at large discounts to face value —Opportunities exist for 20% gross returns through positions that are higher in the capital stack than equity ■Buyers and sellers have not faced the reality of the bid and ask spreads —Distressed sellers faced with the inability to refinance or loss of value due to re-pricing will be squeezed out. Investors with “dry powder” and the ability to move quickly can exploit these opportunities. 4